GROCERY MANUFACTURERS ASSOCIATION
MARCH 2016
The Winner-Take-All
Digital World for CPG
Gabrielle Novacek, Bob Black, Karl Walsh, Jaime Rooney, and Leslie Hinchcliffe
The Grocery Manufacturers Association (GMA) is the trade organization representing
the world’s leading food, beverage and consumer products companies and associated
partners. The U.S. food, beverage and consumer packaged goods industry has facilities
in 30,000 communities, generates $1 trillion in sales annually, contributes $415 billion
in added value to the economy every year and is the single largest U.S. manufacturing
industry with 1.7 million manufacturing workers. Founded in 1908, GMA has a primary
focus on product safety, science-based public policies and industry initiatives that
seek to empower people with the tools and information they need to make informed
choices and lead healthier lives. For more information, visit gmaonline.org.
The Boston Consulting Group (BCG) is a global management consulting firm and
the world’s leading advisor on business strategy. We partner with clients from the
private, public, and not-for-profit sectors in all regions to identify their highest-value
opportunities, address their most critical challenges, and transform their enterprises.
Our customized approach combines deep in­sight into the dynamics of companies
and markets with close collaboration at all levels of the client organization. This
ensures that our clients achieve sustainable compet­itive advantage, build more
capable organizations, and secure lasting results. Founded in 1963, BCG is a private
company with 85 offices in 48 countries. For more information, please visit bcg.com.
AT A GLANCE
The consumer packaged goods (CPG) industry is facing a winner-take-all world in which about
half of all growth is online (more in certain categories and markets), brick-and-mortar market
share and shelf-space prominence do not translate to digital sales, and companies have to earn
their market positions with very different approaches and skills.
A DIFFERENT DIGITAL DRUMMER
Multiple business models are emerging, but a few are disproportionately influential. Early-adopter
consumers are already settling into patterns of digital buying behavior. It appears that success breeds
exponential success.
ALL CPG COMPANIES NEED TO PUT A DIGITAL FOUNDATION IN PLACE...
The basic digital building blocks include developing an integrated strategy, revisiting category
management by channel, rethinking supply chain configuration, and building an adaptive
organization.
...BUT WINNERS WILL GO MUCH FURTHER
Companies that want to finish first in the winner-take-all game need to take additional rapid action
in six key areas.
i THE GROCERY MANUFACTURERS ASSOCIATION • THE BOSTON CONSULTING GROUP
M
any companies do not realize it yet, but the consumer packaged goods (CPG) industry is
facing a winner-take-all world. A world in which about half of all growth is online (more in
certain categories and markets), brick-and-mortar market share and shelf-space prominence
do not translate into digital sales, and nimble new competitors with disruptive strategies (as well as
a few established players) stake out leadership positions and are then hard to dislodge. A world in
which long-standing retail relationships are upended and new retail sales models take hold. In which
companies have to earn their market positions with very different approaches and skills.
In this rapidly transforming world, the difference between winning and losing for a $10 billion
company with a 30% brick-and-mortar market share could reasonably reach $1.65 billion—
approaching 20% of sales. (See Exhibit 1.) A winner-take-all world.
Exhibit 1: The Impact of a Winner-Take-All World
THE DIFFERENCE BETWEEN WINNING AND LOSING FOR
A $10 BILLION COMPANY WITH A MARKET SHARE OF 30%
5% PENETRATION WORLD
10% PENETRATION WORLD
Online sales
($millions)
Online sales
($millions)
2,000
2,000
1,500
2,000
1,500
+$800
1,000
1,000
+$1,650
1,000
500
500
350
200
0
0
10% online
market share
60% online
market share
10% online
market share
60% online
market share
Source: BCG analysis.
In 2014, BCG published a report about how CPG companies needed to plan for a “1-5-10” market in
the US over the subsequent five years. (See the sidebar “About This Report.”) In this market, the 1%
penetration rate of e-commerce will most likely expand to 5% but could quickly accelerate to 10%—or
even more in certain categories and locations. The most likely sector-wide scenario is for e-commerce
in the US to average 5% of the mix by 2018, or some $36 billion in annual sales, which would
represent about half of total expected CPG sector growth. (See Exhibit 2.) As a result, companies
without effective digital capabilities risk stagnation, share loss, or, in some categories, shrinking sales.
At 10% penetration it’s an entirely new paradigm. A little more than one year after that report, not
only is the industry well on track, but penetration is accelerating.
1 THE GROCERY MANUFACTURERS ASSOCIATION • THE BOSTON CONSULTING GROUP
Exhibit 2: Potential Market Evolution
Annual US CPG sales ($billions)
750
725
CONTRIBUTION TO GROWTH
718
2%
28
36
700
~50%
52
675
24
666
8
0
2013
Online
2018E
Off-line
Sources: IRI; Wells Fargo; BCG analysis.
A Different Digital Drummer
This new, winner-take-all digital world is being shaped by four factors. First, while multiple business
models are emerging, a few are disproportionately influential. Second, the game is increasingly played
by new rules requiring very new skills. Third, early-adopter consumers are already settling into
patterns of digital buying behavior. Fourth, and most important, success breeds exponential success.
Influential Digital Business Models. The new digital world is both different and significantly more
complex than the traditional brick-and-mortar retail industry. There are now myriad variations and
permutations in all phases of the business—including product offerings, the ways in which products
are sold and bought, and companies’ interactions with consumers. Consumers move seamlessly back
and forth between digital and traditional channels, often mixing the two: ordering from Amazon on
their smartphones while standing in a store, for example. New business models are rapidly proliferating
and will continue to evolve.
All that said, the various Amazon e-commerce models (starting with home delivery, but also including
Prime, Prime Pantry, Prime Now, and AmazonFresh) are by far the most influential with regard to
consumers and how they shop in the US today. This is primarily because of the breadth of Amazon’s
offerings and the complementary role that search plays during the shopping process. Yet numerous
other business models—for example, that of aggregators such as Instacart that serve as intermediaries
between consumers and brick-and-mortar retailers—are also gaining in importance. In our view, the
most important and most disruptive for many CPG categories will be the click-and-collect model,
under which consumers order online or on their smartphones and pick up their groceries at a store, a
dedicated facility, or a locker later in the day. Click and collect has proved popular in other markets,
such as France and the UK, and it is a powerful fit with the automotive mobility of US consumers,
especially those for whom time constraints are a perpetual pressure as they juggle the demands of jobs
and families. In many instances, these services will be offered by brick-and-mortar retailers, since click
and collect is the best way for these retailers to leverage their existing infrastructure for competitive
advantage. But for plenty of categories in the US today, the initial game is won or lost by the results
that appear on the first page of a search on Amazon, given that many digital consumers never look any
further.
2 THE WINNER-TAKE-ALL DIGITAL WORLD FOR CPG
New Rules, New Skills. A large brick-and-mortar market share does not guarantee online sales. And
the skills and capabilities that build big shares in traditional channels—such as mass-media brand
building, traditional-packaging design expertise, retailer relationship development, shelf management
and optimization, and supply chain management—don’t have the same impact online. Digital skills
include digital-media targeting, online-content management, social-media shaping, search engine
optimization, mobile advertising and app development, and optimizing packaging and the supply
chain for individual-unit picking and home delivery or locker storage.
In the winner-take-all world, these skills are not only requirements but also the new differentiators.
Smaller companies (such as Kind and Annie’s Homegrown) and more agile competitors (such as
L’Oréal) have been quick to build such skills—and to take significant digital market share in key
formats, including Amazon, as a result. For example, a search for the top five grocery brands on
Amazon in March and October of last year found that none belonged to major CPG manufacturers in
March, and only two did in October. Only one major CPG dog-food brand ranked among the top five
Amazon sellers in both months.
Digital Buying Behaviors. Digital channels have opened up a plethora of new options that consumers
have enthusiastically explored—and embraced. Amazon reported that nearly 60% of its customers
shopped using a mobile device during the 2015 holiday season. Target said that mobile traffic made up
60% of Target.com traffic from November through December of 2015. Early adopters are now making
decisions about which models and services they like and want to integrate into their daily lives and
routines, even as they continue to experiment with new innovations. This pattern of exploring widely
then settling down has been evident in other sectors disrupted by digital innovation. One example
is travel, in which frequent travelers checked out multiple online travel agencies, such as Orbitz and
Travelocity, and metasearch offerings (online tools, such as Kayak.com, that use other search engines’
results) before gravitating toward a few long-term winners, such as Expedia in the US (although startups continue to explore new avenues of disruption).
In the grocery sector, more and more consumers are locking into online subscription services, such
as Amazon Subscribe & Save, for regularly purchased items. (Amazon’s estimated share of the online
grocery market rose from 24% in 2012 to 29% in 2014.) Consumers often start with informational
searches on a relatively small subset of e-commerce sites, typically including Amazon, then make
purchases from online retailers whose pricing and quality of product and delivery they have come to
trust. Convenience and emerging habits are the biggest drivers of Amazon’s business.
Millions of consumers have committed to platforms that charge annual membership fees in return
for free shipping and other benefits, such as access to streaming music or video. Amazon has some 41
million Prime members—35% of US households. Factors such as urban density and income certainly
come into play, and many of these shoppers might still try other options from time to time, but once
they lock in, the barriers to actually switching—in terms of money, effort, familiarity, and habit—can
be high. A social-media counterpart is Facebook, which wins by being the primary, but not necessarily
the exclusive, social network in people’s lives.
Success Breeds Exponential Success. Search engines serve up results that are broadly based on
keyword relevance and user popularity. First-page search results on e-commerce sites such as Amazon
are typically based on keyword relevance and actual sales. Because of the ways that most searchengine algorithms work, and the predilection of many consumers to follow the trail blazed by early
adopters, brands that are fast and aggressive online often establish positions that are stronger than
those of their slower competitors—frequently much stronger than could ever be achieved in traditional
retail environments. In the traditional retail environment, companies with deep pockets seek to
3 THE GROCERY MANUFACTURERS ASSOCIATION • THE BOSTON CONSULTING GROUP
dislodge competitors by buying their way to greater sales with new product placements, prominent
shelf displays, and potent consumer promotions. Such deep-pocketed promotional allowances and
campaigns are sometimes impossible to conduct in an e-commerce environment. And even when they
can be implemented, they do not have the same kind of impact. Research has shown that the items
that appear on first-page product searches have very low rates of churn.
As a result of each of these factors (among others), the companies, brands, and products that are
winning in digital are winning big—disproportionally big—and often at the expense of traditional
retail leaders. In the winner-take-all digital game, companies that assume their 20% off-line share will
translate to a 20% online share are playing to lose. Winners get in early, with strategies and campaigns
designed for digital, and they make the often-significant investments necessary to grab share and
build an early lead. They stay out front and frequently increase their leads because sales rankings and
e-commerce algorithms are self-reinforcing. Slower competitors are relegated to also-rans, a position
from which it is hard to catch up. Companies either win big or lose big—and the consequences,
because of the relative pace of CPG growth both online and off-line, are massive.
Major CPG players essentially need to start from scratch in digital commerce against a host of
competitors, many of which have never even shown up on the brick-and-mortar radar screen. It’s a
fundamentally different competitive set, and even the small companies—such as Kind, Keurig Green
Mountain, and Annie’s Homegrown—can be massive disruptors. In category after category, many
such new competitors have already discovered how to win and have created substantial leads.
Traditional CPG companies must first determine how to catch up online—no easy feat—and then
figure out how to integrate their digital and traditional operations, which is the only way to ensure
continued growth over the medium-to-long term.
Six Game Plans for Winning in a Winner-Take-All World
In our 2014 report, we observed that a series of low-risk, no-regret moves can help any company in the
near term to better prepare for a 1-5-10 world. These moves include developing an integrated strategy,
revisiting category management by channel, rethinking supply chain configuration, and building
an adaptive organization. But by themselves these measures are not enough. While they can put a
company in a better starting position, they will not result in the disproportionate gains in share that
are required to win. As the pace of change accelerates and first-mover advantages solidify, companies
that want to win will need to quickly take six actions, as outlined below. We will explore a number of
these more specifically in subsequent publications.
Gain Shelf-Space Prominence. Digital experts often talk about the limitless choice and variety that
e-commerce provides consumers, but this thinking leads to the wrong conclusion. While the number
of available SKUs is theoretically endless, in the real world of the shopper, the far more relevant
consideration is the number of choices most shoppers actually see and the purchases they actually
make. A shopper pushing his or her cart down a long supermarket or discount-store aisle passes dozens
of big brand and product displays grouped for visual impact. In the store, CPG companies exercise
lots of control over where and how their brands are presented. But an online search for a particular
product—toothpaste, say, or coffee—results in three to six choices on a computer screen on the first
view; on a smartphone, such a search typically returns three. How many people scroll down to see
more? In an average Google search, the results on the first page receive 94% of all clicks, and the top
five results get two-thirds of all clicks.
4 THE WINNER-TAKE-ALL DIGITAL WORLD FOR CPG
The SKU selection may be endless, but the amount of “digital shelf space” the consumer actually sees
or uses is highly constrained. And, unlike in a store, this shelf space is driven by algorithms or sales
performance—on that website or app—that can’t be bought. For CPG brands online, out of sight
means out of mind. And companies have much less control over where and how their products are
displayed.
Moreover, not only is digital shelf space limited, but the leading product positions are also highly
“sticky.” It’s very hard to move from lower in the rankings up to the first page, and results at the top
have a big advantage—their position drives an even greater volume of sales as well as clicks, leading to
self-fulfilling reinforcement of digital shelf-space position. For CPG manufacturers, entrenching their
products on the first page is critical, but getting there is a fundamentally different game than winning
shelf space in a brick-and-mortar store. CPG companies need to understand how the drivers of each
retailer’s unique, complex algorithm can be influenced through manufacturer activity, and in turn
focus their marketing and sales efforts on influencing those drivers.
Create a Strategy for Amazon. Just about every CPG company needs a strategy for working with
Amazon, which has very different goals and operates by very different processes than manufacturers’
traditional retail partners. Amazon’s objective is to gain more and more share of total household
spending by offering optimal prices, selection, and convenience, and it is highly sophisticated in
managing both product and total manufacturer profitability. Amazon continually pilots and rolls out
new models and services—including Amazon Prime, Prime Now, Prime Pantry, Amazon Subscribe
& Save, and AmazonFresh—several of which take direct aim at disrupting traditional CPG sales
models. The online retailer is going after multiple brick-and-mortar formats, from club to convenience.
At the same time, Amazon’s operating model serves to reduce the importance of direct manufacturer
interaction and engagement. The model is data driven and designed to put the consumer first; it
functions in a way that is essentially the antithesis of the personalized account-management approach
that has long been the CPG industry standard. The company also provides relatively few points of
contact for most vendors. And scale provides fewer benefits to manufacturers in terms of bargaining
power.
Nevertheless, CPG companies can take steps to improve their situation. One is to develop the
right assortment strategy. Another is to get content management—such as imagery and product
information—and service levels right. Service level performance is a key factor in consumers’
evaluation of Amazon and is therefore also key in Amazon’s evaluation of its suppliers and potential
partners.
Amazon offers a few of its own opportunities as well. The company’s Strategic Vendor Services
provides one way for large CPG manufacturers to build dedicated relationships within Amazon. CPG
manufacturers can also use their expertise to support the expansion and development of Amazon’s
grocery business. They can leverage their logistical capabilities to help Amazon build out its newer
concepts, such as Prime Pantry, and up-and-coming business models, such as AmazonFresh. Amazon
continually experiments and refines its business models and offerings; working closely with the
company can help secure significant first-mover advantages as Amazon explores multiple avenues in its
effort to become the top retail destination in the US and the world.
To be successful, however, CPG companies need to reorient themselves with regard to how Amazon
and other online merchants work. For example, CPG manufacturers need to put a priority on
achieving high first-page rankings for their brands and products by employing search-engineoptimization techniques, creating top product content, and continuously building good consumer
reviews. They also need to rethink packaging and innovation for e-commerce and adapt their supply
chain to keep up with Amazon’s expansion.
5 THE GROCERY MANUFACTURERS ASSOCIATION • THE BOSTON CONSULTING GROUP
Develop the Capabilities for Click and Collect. Online grocery shopping, especially via click and
collect, is catching on in the US—and with good reason: consumers love the idea. Grocers’ most
important customers—young families and affluent couples—are especially ready to take advantage of
online grocery shopping. And when they do make purchases online, they are likely to spend far more
across all channels than they would have done by shopping in the traditional way: the uplift often
ranges from 30% to 50%. A substantial rise in online penetration occurs in any market in which two
or three grocers engage in an online fight for customers, as the competing companies invest in building
and marketing their offers.
Consider the evolution of the online grocery market in France. Momentum was slow in the first
several years of e-commerce availability, but once big players built up a head of steam, penetration rose
fast. Retailer Auchan was the first to offer a click-and-collect service, way back in 2000. The second
competitor, E.Leclerc, didn’t even enter the market until 2008. But in 2011, the click-and-collect
model took off, and by the end of that year there were 750 click-and-collect centers. Only three years
later, France—a country that is 1.3 times the size of California, with 1.5 times the population—had
more than 3,000 such centers. (See Exhibit 3.) Once consumers experienced the model and became
comfortable with it, they showed up in droves and demanded more. Early movers secured significant
long-term competitive advantage.
Exhibit 3: Growth of Click and Collect in France
Number of click-and-collect locations in France
4,000
>3,000
2,721
3,000
1,890
2,000
1,000
750
0
2000
2001
2002
2003
2004
2005
2006
2007
First mover
Entrance of others
Second entrant
Aggressive rollout
2008
2009
2010
2011
2012
2013
2014
Maturity
Sources: E.Leclerc website; Nielsen research; BCG analysis.
Geographic considerations and current consumer shopping patterns indicate that the environment for
click and collect is even more favorable in the US. Several major supermarket chains and mass-market
retailers—including Kroger, Wal-Mart, Target, and Whole Foods—are piloting or building out clickand-collect services, and some big new names are entering the online grocery game. Even Amazon is
experimenting with it, and Kroger recently announced plans to open 1,200 click-and-collect facilities.
6 THE WINNER-TAKE-ALL DIGITAL WORLD FOR CPG
As click and collect grows in importance, it will be especially disruptive to categories that depend on
impulse purchases because it often involves drive-through, rather than in-store, pickup.
The logistics of click and collect are complex, and profitability depends substantially on getting them
right. Retailers need the active collaboration of their CPG partners to make critical decisions, such
as determining which of the front-end models (in-store pickup, drive-through pickup, and lockers)
should be leveraged and how. Similarly, retailers and their CPG suppliers must decide which of
the many back-end models to deploy. Choices include ordinary stores with individual picking and
“dark” stores (which are closed to the public but used by employees to prepare customers’ orders)
with individual picking or items packed in cases. In addition, figuring out how to continue to capture
impulse purchases and fresh produce and meat sales will also have a significant impact on the appeal
to consumers and the economics of click-and-collect operations. Smart CPG companies will position
themselves now as active participants in developing click-and-collect networks with more aggressive
retailers.
Keep Up with New Models. As in the brick-and-mortar world, CPG companies need to think
in terms of their true share across all digital outlets, or digital all-commodity volume (ACV). A
company might build high ACV by working closely with Amazon and the e-commerce entities of
its core traditional retailers, but the digital marketplace constantly evolves. Other retail models, such
as Instacart and Kroger ClickList, are starting up; and while some disappear, others gain consumer
traction quickly. No one can predict which models or formats will catch fire, but we do know that
mobile channels will have an outsize impact. And establishing position early is important because of
the small, finite, and sticky attributes of the digital shelf. This means that CPG companies will have to
not only concentrate resources on clear winners such as Amazon and the click-and-collect model but
also place early bets on other emerging models to both develop shelf positions and gain intelligence
and expertise. (They also need to have plans in place for quickly exiting bad bets before too much time
and money are wasted.)
Woody Allen famously joked that 80% of success is just showing up. In the same vein, the key for
CPG companies is being present, not trying to be perfect. Manufacturers need to establish positions
in new formats and try to gain some scale and leverage as they manage presence and content across
various platforms and partners, until they see signs of specific formats taking off and can reprioritize
and increase their efforts. According to TechCrunch, which follows the technology industry, more
than $1 billion was invested in food and grocery delivery in 2014. For example, Jet.com, which offers a
unique pricing structure that discounts items as shoppers fill their checkout baskets, has received $720
million in funding to date.
Retool Marketing and Media. As consumers spend more time and money online, and digital-media
spending approaches half of some CPG companies’ advertising budgets, businesses will need to learn
how to use online and mobile media not only to close sales at the end of the purchasing journey but
also to build the brand and engage consumers during the prepurchase phases and to build advocacy in
the postpurchase phase.
The old purchasing funnel has morphed into a multifaceted mesh of online, off-line, and in-store
interactions that make marketing campaigns and media planning far more complex than they used
to be. Breaking down this pathway into unique customer “touch points”—normal activities that take
place throughout the day of potential customers and that can be intercepted by both online and offline media or engagement—can help simplify strategic planning. The catch is that in a world in which
consumers are continually bombarded with more media and digital content than they can reasonably
take in, the key to success is relevance—delivering the right content to the customer through an
appropriate channel at a propitious touch point.
7 THE GROCERY MANUFACTURERS ASSOCIATION • THE BOSTON CONSULTING GROUP
To be effective at digital marketing, CPG companies need to do more than simply reallocate brand
spending online. But since there is no one-size-fits-all approach, traditional consumer segmentation
and differential approaches do not work. Effective campaigns require a deep understanding of
individual consumers rather than of consumer types. Our research has shown that there are
considerable variations in behavior patterns and needs even within relatively small categories or
segments. For example, two new dog owners with similar incomes and demographic profiles will
not only research and buy pet food differently (moving back and forth between digital and physical
channels), but they will also expect to find digital marketing and offers customized to their individual
situations and needs—a challenge that, in more intimate categories, may be complicated by the need
to avoid potential offense. Achieving this level of understanding requires investment in comprehensive
and detailed data on consumers’ digital journeys (24-7), powerful analytical approaches and tools, and
advanced internal capabilities and processes.
Building a brand online also requires understanding which metrics to use to track each type of digital
activity, since the goal in the early stages of the purchasing journey is to identify touch points and
engage the customer rather than close the sale. A big challenge for many, if not most, CPG companies
is that that they do not currently possess the necessary skills and capabilities in testing and other
essential areas.
Consider programmatic advertising, for example, which is increasingly becoming a staple of digital
marketing campaigns. BCG research with advertisers in five major advertising categories, including
consumer products, has shown that companies using the latest data-driven techniques delivered major
increases in both consumer engagement and campaign performance, with an average improvement
of 32%—and as high as 50% in some cases—in cost per action, the key metric for most digital
campaigns. (See Adding Data, Boosting Impact: Improving Engagement and Performance in Digital
Advertising, BCG Focus, September 2014.) But last year’s research into companies’ digital marketing
capabilities found that CPG companies consistently scored unsatisfactorily for capabilities such as
digital targeting, display media, mobile advertising, marketing analytics, and testing—all of which are
essential to mount effective advanced programmatic campaigns. (See The Talent Revolution in Digital
Marketing, BCG Focus, September 2015.)
The scale and nature of the skills gaps in CPG suggest that companies need to do much more
than tinker with their recruitment and training programs. Most need to transform their marketing
functions, making the development of digital capabilities a top business priority, rewiring the
organization accordingly, and significantly boosting learning-and-development programs to produce
the needed skills. With digital channels and tools constantly emerging, marketing organizations must
become more agile—to borrow a term from the world of software development—iterating much more
quickly to adapt to rapidly changing conditions. (See The Agile Marketing Organization, BCG Focus,
October 2015.)
Lead from the Front. Leadership, by definition, requires action. No company can win, especially
disproportionately, if it isn’t leading—and leading aggressively. But it’s hard to win the race if you are
unfamiliar with the course.
Most successful CPG manufacturers face two related issues. First, they are reluctant to significantly
overcommit and dedicate too much valuable time and energy, and too many scarce resources, to
a business area that is currently small and complex and that has an uncertain future. For many
companies, the constant pressure of meeting shareholders’ expectations for the next quarter’s earnings
doesn’t help, either.
There’s good reason for this, of course, and it’s related to the second issue, which is that even senior
8 THE WINNER-TAKE-ALL DIGITAL WORLD FOR CPG
management teams that want to commit to digital—because they understand that it is, or soon will
be, important—realize that their knowledge is relatively superficial and that they haven’t developed
the innate intuition and confidence that guide them in other areas in which they often demonstrate
aggressive leadership. The majority of today’s leaders didn’t grow up in the digital world, and though
they may have iPhones and Facebook accounts, book travel on Expedia, and buy things on Amazon—
some may even occasionally tweet or use Snapchat—they are nowhere near immersed in digital
culture. They don’t have the kind of experience that gives them the confidence to predict trends, make
big bets, and then support those decisions with substantial company resources.
Yet leadership is critical. Tough choices need to be made on where to go, how fast to get there, what
resources will be required for the journey (and where to take them from), and which people and skill
changes will be needed on the way. Many companies are looking at the need to build a business that
will be as big as 10% of their current business. This requires big bets, often with payoffs that aren’t
immediately clear. It also requires conviction and knowledge and the development of an aggressive
digital mind-set across the business leadership team. It means that leaders must commit to venturing
into uncharted territory together as a team, to climbing a steep learning curve quickly, to coming to
grips with a new breed of consumer and a new set of rules, and, above all, to setting bold objectives
and pursuing them relentlessly. As we have already pointed out, tepid moves and half steps won’t work.
Achieving a disproportionate prize—one that could be on the order of winning or losing 10% to 15%
of a company’s revenues—requires aggressive effort, especially when you are most likely starting from
behind.
I
n the winner-take-all world, the competition is as quick and nimble as traditional players are
deliberate. Though it’s hard for big organizations to change quickly, CPG companies need to alter
the way they play—speed is an ally; hesitation means falling behind. Those that want to continue
to grow will start to refocus their efforts, organizations, and budgets toward winning in digital
channels now.
9 THE GROCERY MANUFACTURERS ASSOCIATION • THE BOSTON CONSULTING GROUP
ABOUT THIS REPORT
This report is the first in a series of publications to be produced in the coming months by BCG and
the Grocery Manufacturers Association (GMA) on the winner-take-all world in consumer packaged
goods (CPG). The series builds on the work done for the report The Digital Future: A Game Plan for
Consumer Packaged Goods, produced by BCG, the GMA, Google, and IRI (August 2014).1 The series
will look in-depth at the coming changes in the consumer goods sector and present potential strategies
in multiple areas that CPG companies can pursue in response. These areas are gaining “digital
shelf space” prominence; winning with Amazon; developing the capabilities for click and collect;
mastering other new retail models; and leadership in the digital age. The series is based on research
conducted collaboratively by BCG and the GMA as well as BCG client experience. The results have
been discussed with executives from GMA member companies, but BCG is wholly responsible for all
analyses, conclusions, and recommendations.
NOTE:
1
See https://www.bcgperspectives.com/content/articles/digital_economy_consumer_products_digital_future_game_plan_consumer_
packaged_goods/#chapter1.
10 THE GROCERY MANUFACTURERS ASSOCIATION • THE BOSTON CONSULTING GROUP
About the Authors
Gabrielle Novacek is a partner and managing director in the Chicago office of The Boston
Consulting Group. You may contact her by e-mail at [email protected].
Bob Black is a senior advisor in the firm’s Dallas office. You may contact him by e-mail at
[email protected].
Karl Walsh is an associate director in BCG’s Los Angeles office. You may contact him by e-mail at
[email protected].
Jaime Rooney is a principal in the firm’s Minneapolis office. You may contact her by e-mail at
[email protected].
Leslie Hinchcliffe is a knowledge expert in BCG’s Chicago office. You may contact her by e-mail at
[email protected].
Acknowledgments
The authors are grateful to Patricia Stockton, Julie Savoie, and the members of the GMA digital
subcommittee for their help in the preparation of this report. They also thank the following BCG
partners and colleagues for their insights and assistance: Dan Meng Chen, Jeff Gell, Patrick Hadlock,
Natalie Hernandez, and Brian Quist.
The authors thank Kim Plough and Jenifer Zacharias for helping to coordinate the preparation of the
report. They thank David Duffy for his writing assistance and Katherine Andrews, Gary Callahan,
Lilith Fondulas, Kim Friedman, Abby Garland, and Sara Strassenreiter for their contributions to the
report’s editing, design, and production.
For Further Contact
If you would like to discuss this report, please contact one of the authors or Julie Savoie at
+1 202 295 3922 or [email protected].
To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or
[email protected].
To find the latest BCG content and register to receive e-alerts on this topic or others, please visit
bcgperspectives.com.
© The Grocery Manufacturers Association and The Boston Consulting Group, Inc. 2016. All rights reserved.
3/16
11 GMA INFORMATION TECHNOLOGY BENCHMARKING 2015
©2016
GROCERY MANUFACTURERS ASSOCIATION
1350 I Street, NW
|
Suite 300
www.GMAonline.org
|
Washington, DC 20005
|
|
ph 202-639-5900
www.FactsAboutGMOs.org
www.facebook.com/GroceryManufacturersAssociation
|
|
|
fx 202-639-5932
www.FactsUpFront.org
www.gmaonline.org/blog
|
@GroceryMakers